System and method for processing financial transactions

ABSTRACT

A network for processing retail sales transactions includes a customer transceiver with a unique customer number, a reader receiving the customer number and sending it to a point-of-sale device where it is combined with transaction information to form a transaction entry. The transaction entry is sent through a merchant computer to a transaction processing system having a customer database. The transaction processing system references an entry in the customer database corresponding to the customer/transmitter ID number and routes the transaction entry to a payment processing system specified in the customer database entry.

This application claims priority in U.S. Provisional Application No.60/120,760, entitled “System and Method for Processing FinancialTransactions,” filed Feb. 19, 1999, bearing attorney docket no.03204-6000.

FIELD OF THE INVENTION

The invention relates generally to retail transactions and, moreparticularly, to systems and methods for monitoring consumer behaviorand for providing a secure, electronic payment in exchange for goods andservices.

DESCRIPTION OF THE RELATED ART

Retail store chains survive on high sales volumes and low profitmargins. Accordingly, retail professionals are constantly searching forcost-effective mechanisms to encourage consumers to shop at their retailstores and for efficient low-cost methods to process completed retailtransactions. In the past, the most common approach utilized byretailers for motivating customers to shop in a particular establishmentwas to provide purchasing incentives to their customers, usually in theform of printed discount coupons. These coupons have been distributed tocustomers either through mass mailings or in a more focused manner,based on a customer's previous purchasing habits. Coupons have also beengiven to customers in retail stores, either from kiosks or at thecheck-out stand, in response to the customer's purchase of somepreselected item or items.

Retailers have come to the realize that the more efficient approach toencouraging consumers to shop at their retail store is identify loyalcustomers and to offer incentives to them in response to their continuedloyalty. Implementing systems that track customer purchasing trends forthe purpose of identifying loyal customers can be prohibitivelyexpensive. Furthermore, promoting retail store loyalty is atime-consuming process that necessitates determining consumer needs,which vary across demographic boundaries, and then providing the goodsthat satisfy those needs. Unfortunately, the process of analyzingcollected consumer data is also expensive, time-consuming, and oflimited use. Regional and national consumer demographics data availablefrom Nielson and other agencies regarding consumer product movement ispredictably too general to be useful to specific retailers.Additionally, these agencies do not address product movementdemographics that would allow retailers to learn the particular needsand buying habits of people purchasing specific products.

An alternative to the traditional loyalty program that does not requiredemographics data is one in which increased sales and customer loyaltyis obtained through a reward system. For example, the airline industryrewards loyal customers using frequent flyer programs. Attempts havealso been made to develop “frequent shopper” marketing and salespromotion services in retail sales. Other retailers have experimentedwith programs that reward frequent shoppers by distributing cards tocustomers who regularly purchase name brand goods manufactured by aparticular vendor. Cards are used at participating retail stores toidentify the customer and record purchases of particular brand goods andto award points based on the number of brand good purchases. Points areaccumulated, and gifts are given to the card member based on apredetermined criteria.

Unfortunately, none of these services completely address or meet theneeds and interests of modern retailers. For example, many of theseexisting programs encourage “brand loyalty” or “retail store loyalty,”but do not permit the retailer to reward across brands (co-branding) oracross retailers. Specifically, none of these services allow a retailstore owner to reward purchase of Coca Cola™ products with a discount onFrito Lay™ snacks. Furthermore, none of these services allow a Wendy's™franchise owner to reward the purchase of a predetermined number ofWendy's products with a complementary oil change at Jiffy Lube™ forexample. Moreover, none of these services allow a retailer to associateparticular consumer groups with specific consumer needs. For example, inthe grocery retail business in the United States, double income familiesare pressed for time and show a trend toward less time being spentshopping and preparing meals. Retail grocers are challenged to provideincentives to encourage these kinds of shoppers into their stores.Retailers and consumers alike could benefit from systems that allowretailers to identify health conscious consumers and to offer incentivesthat appeal to the consumer's need for natural and/or healthy foods.Identifying those shoppers having special dietary needs, e.g. medicalproblems and then marketing to those dietary needs may be particularlyadvantageous to retailers. Providing products that appeal to certaingroups instead of offering generic grocery items may also be profitable.

Complicating the reality that modern-day loyalty programs do not meetthe needs of the modern retailer is the fact that an increasing numberof retail store customers also own personal computers with many havingaccess to computer network services that provide connections to theInternet. Although some computer sites connected to the World Wide Webhave begun to offer “online” shopping services, and some services haveproposed to deliver discount coupons through a computer network, thefill potential of online delivery of incentives has not been realized.

Aside from restricting the growth of loyalty programs, it is widelysuspected that the emergence of the World Wide Web has also created anavenue for increased consumer exposure to fraudulent “online”transactions. Internet-based payment solutions give unprecedented accessto personal information by uninvited eavesdroppers. Conducting thesetypes of transactions over the Internet consequently requires additionalsecurity measures that are not found in conventional transactionprocessing networks. This additional requirement is necessitated by thefact that Internet communication is performed over publicly-accessible,unsecured communication lines in stark contrast to the private,dedicated phone line service utilized between a traditional “brick andmortar” merchant and a credit authorizing organization. As an example,FIG. 1 is a diagrammatic representation of a conventional system 10 forprocessing retail non-cash transactions. A customer enters a merchantstore 12 and makes a purchase using a credit card issued for example, byone of a plurality of credit card issuing agencies such as a bank orpayment processing system 16. Merchant store 12 may be one of a largenumber of similar stores, all owned or managed by a common parentcorporation or headquarters 14. A record of each credit cardtransaction, regardless of which card was used, is transmitted by adedicated communications channel 13 to merchant corporation headquarters14 of the retail outlet 12. A processor at merchant corporationheadquarters 14 analyzes the credit card transaction records receivedand then routes the transaction, along a second dedicated communicationschannel 15, to an appropriate payment processing system 16, according tothe identification of the particular credit card used in the originaltransaction.

Compare that to the situation that arises when an online consumerpurchases goods and services over the Internet. As shown in FIG. 2, whena consumer 18 transmits credit card information to an online merchant24, the information passes through countless servers 21 and routers 22on its way to the online merchant 24. Along the way, the information caneasily be scanned and scrutinized by numerous interlopers (not shown).Thus, it is critical that any retail processing system utilizing theInternet or any other unsecured network as a communication medium, mustemploy some form of security or encryption.

In view of the shortcomings of currently available online transactionprocessing systems and methods, it is desirable to provide a system andmethod that increases customer convenience and security. It is alsodesirable to provide a system and method that allows merchants to easilycompile demographics data for use in designing customer loyalty andincentive programs.

SUMMARY OF THE INVENTION

The present invention satisfies the above-described need by providing asystem and method for processing consumer transactions. In the system ofthe present invention, a consumer located in a retail establishmentidentifies goods or services to be purchased and then communicatespayment information to the merchant by transmitting an identificationsignal via a wireless customer transceiver to a merchant transceivercoupled to a point of sale (POS) device. Once the merchant transceivercaptures the customer ID, it passes it to a POS device that thencombines the customer ID, merchant ID and transaction data into anauthorization request. The POS device then transmits the data to atransaction processing system (host computer) where the customer'spayment method is identified. For payment methods requiringauthorization, a request for authorization transmitted to theappropriate payment processing center. Once the payment processingcenter authorizes the transaction, it transmits an authorization codeback to the POS device via the transaction processing system. Since thesystem never transmits a customers credit card or debit card numberacross an unsecured link, it provides a heightened degree of securityover prior art systems. Also, by communicating with the merchant via awireless customer transceiver, the system increases customer confidencethat their credit card number or other payment data will not beimpermissibly accessed and fraudulently utilized by nefarious retailstore employees. The system also provides a much greater degree ofconvenience to participating customers since it allows them to preassignspecific payment methods to specific retail establishments, and to havethe preassigned payment methods automatically selected by thetransaction processing system whenever the customer utilizes his/herwireless customer transceiver in the merchant's retail establishment.

The system also provides unprecedented benefits to merchants. Mostimportantly, the transaction processing system which is networked to themerchant's in-store POS devices, and to the merchant's on-line shoppingnetwork, allows merchants to quickly and efficiently process non-cashtransactions for in-store and on-line customers, using the same system.Also, since a merchant can track the purchasing history of each customerwho uses the transaction processing system to authorize payments, themerchant may provide for targeted incentives to the customer based onhis or her prior purchases, regardless of their method of origination(in-store or on-line). Moreover, the transaction processing system'sassociation with a plurality of different merchants allows a merchantassociated with the system to couple its incentive program with that ofanother participating merchant, thereby allowing customer loyalty to beawarded across multiple merchants.

In another aspect, the present invention provides a method for securelyprocessing financial transactions over the Internet or other unsecurednetwork. The method includes utilizing a wireless customer transceiverto transmit a customer's ID to a transceiver coupled to the customer'scomputer. The computer identifies the desired product from a merchant'sonline WEB site and transmits the customer ID and the productinformation to the transaction processing system. As in the case of thepreferred embodiment, the transaction processing system identifies theselected payment method and transmits the authorization request to theappropriate payment processing center. Once the transaction processorauthorizes the transaction, it transmits an authorization code to theonline merchant and the merchandise is then delivered to the customer'saddress. In addition to transmitting a transaction authorization, thetransaction processing system also may transmit identificationinformation and other data unique to the associated customer in theabsence of a retail transaction. An additional embodiment of atransaction processing system includes a system capable of transmittinginstructions to a vendor based on receipt of a customer ID (e.g., issuea ticket to the customer, provide access to the customer, etc.)

In yet another aspect, the present invention provides a method forassociating a customer's preferences with his or her customer ID. Forexample, a fast food restaurant chain may choose to collect and store adescription of a customer's favorite meal so that when the customertransmits his ID to a merchant transceiver located in the fast foodrestaurant, his favorite meal is ordered and payment processing occurs,without the customer uttering a single word.

To achieve these and other advantages, and in accordance with thepurpose of the invention as embodied and broadly described, theinvention provides a system for processing retail transactions. Thesystem comprises a wireless customer transceiver preprogrammed with aunique customer/transmitter ID number, and a merchant transceiver thatcaptures the customer/transmitter ID and forwards it to an associatedPOS device. The POS device receives transaction data via an input deviceand combines the transaction data with the received ID signal from thereader to form an authorization request. At least a portion of theauthorization request may be encrypted to further enhance security. ThePOS device transmits the authorization request over a communicationschannel to the transaction processing system that includes a processorand a customer information database. The customer information databaseincludes a plurality of customer entries with associated transactionprocessing attributes. The processor receives the authorization request,decrypts it (if necessary) and transmits it to the payment processingsystem in accordance with the customer's predetermined choice of paymentmethod. The processor also stores data derived from a transaction entryassociated with the customer ID. In addition to processing transactions,the system facilitates the collection and analysis of comprehensivedemographics and purchasing data for managing consumer loyalty programsand performing trend analysis of consumer purchasing trends.

It is to be understood that both the foregoing general description andthe following detailed description are exemplary and explanatory and areintended to provide further explanation of the invention as claimed.

Additional features and advantages of the invention will be set forth inthe description which follows, and in part will be apparent from thedescription, or may be learned by practice of the invention. Theobjectives and other advantages of the invention will be realized andattained by the methods, systems, and apparatus particularly pointed outin the written description and claims hereof, as well as theaccompanying drawings.

BRIEF DESCRIPTION OF THE DRAWINGS

The accompanying drawings, which are incorporated in and constitute apart of this specification, illustrate embodiments of the invention and,together with the description, serve to explain the objects, advantages,and principles of the invention.

In the drawings:

FIG. 1 is a diagram illustrating a conventional retail credit cardtransaction processing system;

FIG. 2 is a diagram illustrating a conventional online computer systemfor purchasing goods and services over the Internet;

FIG. 3 is a diagram illustrating an improved system for processingtransactions, consistent with the present invention;

FIG. 4 is a diagrammatic representation of a point of sale device inaccordance with the present invention;

FIG. 5 is a diagrammatic representation of a payment processing terminalin accordance with the present invention;

FIG. 6 is a diagrammatic representation of a transaction processingsystem in accordance with the present invention;

FIG. 7 is a diagrammatic representation of an alternate embodiment of asystem for processing transactions in accordance with the presentinvention;

FIG. 8 is a diagrammatic representation of an online merchant computerin accordance with the present invention;

FIG. 9 is a diagrammatic representation of an online customer computerin accordance with the present invention;

FIG. 10 is a diagrammatic representation of a customer transceiver inaccordance with the present invention;

FIG. 11 is a detailed flow diagram depicting the steps performed by thepreferred embodiment of a customer transceiver when brought in proximityof a merchant transceiver;

FIG. 12 is a diagrammatic representation of a merchant transceiver inaccordance with the present invention;

FIG. 13 is a flow diagram illustrating the preferred method forprocessing financial transactions in accordance with the presentinvention;

FIG. 14 is a detailed flow diagram depicting the steps performed toenroll a customer in accordance with the present invention;

FIG. 15 is a detailed flow diagram depicting the steps performed toprocess a customer transaction in accordance with the present invention;

FIG. 16 is a detailed flow diagram depicting the steps performed toperform an end of day closing in accordance with the present invention;and

FIG. 17 is a detailed flow diagram depicting the steps performed tomanage a customer loyalty program in accordance with the presentinvention.

DETAILED DESCRIPTION OF A PREFERRED EMBODIMENT

In the following detailed description of the preferred embodiment,reference is made to the accompanying drawings that form a part thereof,and in which is shown by way of illustration a specific embodiment inwhich the invention may be practiced. This embodiment is described insufficient detail to enable those skilled in the art to practice theinvention and it is to be understood that other embodiments may beutilized and that structural changes may be made without departing fromthe scope of the present invention The following detailed descriptionis, therefore, not to be taken in a limited sense.

To achieve these and other advantages, and in accordance with thepurpose of the invention as embodied and broadly described, theinvention provides a system for processing retail transactions. Thesystem comprises a customer transceiver preprogrammed with a uniquecustomer/transmitter ID number, and a merchant transceiver that receivesa customer identification signal from the customer transceiver and thenforwards the received customer ID signal to an associated POS device.The POS device receives transaction data via an input device andcombines the transaction data with the customer ID signal to form anauthorization request, in those cases when the payment method requiresan authorization. The POS device transmits the authorization requestover a communications channel to a transaction processing system thatincludes a processor and a customer information database comprised of aplurality of customer entries with associated transaction processingattributes. The processor receives the authorization request andtransmits it to the payment processing system dictated by the customer'spayment choice for the transaction. The processor also stores dataderived from a transaction entry associated with the customer ID. Inaddition to processing transactions, the system facilitates thecollection and analysis of comprehensive demographics and purchasingdata for managing consumer loyalty programs and performing trendanalysis of consumer purchasing trends.

Turning first to the nomenclature of the specification, the detaileddescription which follows is represented largely in terms of processesand symbolic representations of operations performed by conventionalcomputer components, including a central processing unit (CPU), memorystorage devices for the CPU, and connected pixel-oriented displaydevices. These operations include the manipulation of data bits by theCPU and the maintenance of these bits within data structures residing inone or more of the memory storage devices. Such data structures impose aphysical organization upon the collection of data bits stored withincomputer memory and represent specific electrical or magnetic elements.These symbolic representations are the means used by those skilled inthe art of computer programming and computer construction to mosteffectively convey teachings and discoveries to others skilled in theart.

For the purposes of this discussion, a process is generally conceived tobe a sequence of computer-executed steps leading to a desired result.These steps generally require physical manipulations of physicalquantities. Usually, though not necessarily, these quantities take theform of electrical, magnetic, or optical signals capable of beingstored, transferred, combined, compared, or otherwise manipulated. It isconventional for those skilled in the art to refer to these signals asbits, values, elements, symbols, characters, terms, objects, numbers,records, files or the like. It should be kept in mind, however, thatthese and similar terms should be associated with appropriate physicalquantities for computer operations, and that these terms are merelyconventional labels applied to physical quantities that exist within andduring operation of the computer.

It should also be understood that manipulations within the computer areoften referred to in terms such as adding, comparing, moving, etc. whichare often associated with manual operations performed by a humanoperator. It must be understood that no such involvement of a humanoperator is necessary or even desirable in the present invention. Theoperations described herein are machine operations performed inconjunction with a human operator or user who interacts with thecomputer. The machines used for performing the operation of the presentinvention include general purpose digital computers or other similarcomputing devices.

In addition, it should be understood that the programs, processes,methods, etc. described herein are not related or limited to anyparticular computer or apparatus. Rather, various types of generalpurpose machines may be used with programs constructed in accordancewith the teachings described herein. Similarly, it may proveadvantageous to construct specialized apparatus to perform the methodsteps described herein by way of dedicated computer systems withhard-wired logic or programs stored in nonvolatile memory, such as readonly memory.

The operating environment in which the present invention is usedencompasses general distributed computing systems wherein generalpurpose computers, workstations, or personal computers are connected viacommunication links of various types. In a client server arrangement,programs and data, many in the form of objects, are made available byvarious members of the system.

Referring now to the remaining figures, corresponding referencecharacters refer to corresponding elements, wherever possible.

FIG. 3 is a diagrammatic representation of a system 30 for processingretail non-cash transactions in accordance with a preferred embodimentof the present invention. In FIG. 3, system 30 is comprised of merchantstore 12, payment processing system 16 and transaction processing system26. Located in merchant store 12 is at least one POS device 34 forcapturing transaction and customer identification data. Paymentprocessing system 16 utilizes at least one payment processing terminal52 to process purchase transactions. POS device 34 communicates withtransaction processing system 26 over communications link 28 and paymentprocessing terminal 52 communicates with transaction processing system26 over communications link 32. While this specification describes asystem wherein POS device 34 communicates directly with transactionprocessing system 26, it is understood that POS device 34 may actuallycommunicate with one or more intermediate computers that thencommunicate with transaction processing system 26, without departingfrom the spirit and scope of this invention. Communication links 28 and32 may be secure, dedicated communication links (like links 13 and 15 inFIG. 1) or publicly accessible and unsecured.

A diagrammatic representation of POS device 34 is shown in FIG. 4. POSdevice 34 is any device used by merchants at the point of sale to recordtransactions between customers and merchants, including cash registers,point-of-sale terminals, etc. As shown, POS device 34 is comprised of aconventional microprocessor 36, a random access memory (RAM) 38, aninput device (e.g., keyboard, scanner, etc.) 40, a display or screendevice 42, a mass storage 44 (e.g., hard or fixed disk, removable floppydisk, optical disk, magneto-optical disk, or flash memory), a networkinterface card, modem or controller 46 (e.g., Ethernet), and a merchanttransceiver 48. As shown, the various components of each POS device 34communicate through a system bus 51 or similar architecture. POS device34 communicates with other POS devices (not shown) and with transactionprocessing system 26 via network interface card or modem 46.Alternatively, the POS device 34 may be connected via an ISDN adapterand an ISDN line for communications with the transaction processingsystem 26. merchant transceiver 48 provides wireless communication witha customer transceiver 50 (explained below) which may be carried by acustomer on, for example, his key chain. There may be other componentsas well, but these are not shown to facilitate description of the uniqueaspects of this embodiment of the invention. The hardware arrangement ofthis computer, as well as the other computers discussed in thisspecification is intentionally shown as general, and is meant torepresent a broad variety of architectures, which depend on theparticular computing device used. For example, mass storage devicesdepicted with each computer may be co-located with its associatedcomputing device on an internal storage device or it may be remotelylocated on an external storage device.

A diagrammatic representation of payment processing terminal 52 is shownin FIG. 5. Like POS device 34, payment processing terminal 52 iscomprised of a CPU 54, RAM 56, a mass storage device 62, and a networkinterface card or modem 64 for communicating with transaction processingsystem 26. Stored in mass storage device 62 is a payment database 66 forauthorizing payment in response to consumer transactions.

A detailed diagram of transaction processing system 26 is shown in FIG.6. As shown in FIG. 6, transaction processing system 26 is comprised ofa CPU 86, RAM 88, an input device 90, a display or screen device 92, amass storage device 94, and a network interface card or modem 96 forcommunicating with POS device 34 and payment processing terminal 52.Stored in mass storage device 94 is a customer information database 100for identifying a customer, payment method, payment processor, andauthorization data format when given a customer/transmitter ID number.The organization of data inside customer information database 100 maytake on a variety of physical structures, dependent upon evolving datamanagement technology. Examples include, but are not limited to flatfiles, relational tables, star tables, hierarchical files, and objects.The data will be organized so that storage and retrieval of customerdata facilitates effective navigation, association, and use ofcustomer-related data for identification, transaction authorization,customer contact, identification of customer preferences and other usesof the data consistent with the spirit and scope of this invention. Thedatabase is structured to provide maximum security to protect theprivacy of customer and merchant information. The ability to relategroups of data such as customer data with specific customer transactiondata, for example, will be controlled via the structure of the datastorage design as well as through controls of the database system toprevent unauthorized access of detailed and aggregated data by bothinternal and external sources.

As shown in FIG. 6, customer database 100 may be comprised of thefollowing categories of information: customer profile information 102,merchant information 104, fraud information 106, loyalty programinformation 108, transaction information 110, customer payment methodinformation 112, and customer personal information 114. Customer profileinformation 102 identifies and describes each customer. It includes, butis not limited to: customer address data, phone number, occupation, PIN,billing address, primary account holder name, authorized user name,customer transceiver activation status and customer transceiveridentification number. Merchant information 104 identifies and describeseach participating merchant. It includes, but is not limited to:merchant name, accepted payment methods with associated authorizationprocedures (if appropriate), merchant location and merchant identifier.It is important to note that some payment methods (e.g., check, creditand debit) require authorization procedures, while others (e.g., cash,certified check, etc.) do not. Fraud information 106 is used to ensurethat customer transceivers 50 are not used by unauthorized users. Thisinformation includes, but is not limited to: transmission deviceidentifier, activation status, merchant identifier, merchant location,date of sale, time of sale and sale amount. Loyalty program information108 defines specific merchant loyalty programs. It includes, but is notlimited to: program rules, specific points or other benefits for eachmerchant loyalty program component. Transaction information 110 includesa listing of the transactions previously conducted by a customer usingtransaction processing system 26. The information includes, but is notlimited to: transaction type, item purchased, merchant, date purchased,dale amount, loyalty program usage. Customer payment method information112 defines the payment method to be used by each customer at eachmerchant. Examples include, but is not limited to: default paymentmethod, credit card number, debit card number, bank account number,associations between each merchant and each payment method. Customerpersonal information 114 comprises a plurality of individual customerpurchasing preferences and other customer-unique personal information.For example, suppose the merchant is Burger King™. The purchasingpreference could be the customer's favorite meal or menu item such thatwhenever the customer initiates a transaction with the merchant, thepurchasing preference will automatically be ordered for the customer.Other examples include, but is not limited to: customer shoe size, suitsize, spouse's birthday, spouse's suit size, etc. Additional informationmay be stored in customer transaction database 100, and the data may beorganized in a different manner, without departing from the scope of thepresent invention.

A second embodiment of the present invention is directed to a method andapparatus for securely processing financial transactions over theInternet or other unsecured network. FIG. 7 is a diagrammaticrepresentation of a system 700 for processing retail, non-cashtransactions in accordance with the second embodiment. In addition tothe elements shown in FIG. 3, system 700 in FIG. 7 further comprises anonline consumer terminal 710 that communicates with transactionprocessing system 26 over communications link 715. Online merchant 12′replaces merchant store 12, online merchant computer 734 replaces POSdevice 34, and communication link 28′ replaces communication link 28shown in FIG. 3. In this embodiment, communication links 28′ and 715 aretypically unsecured, publically accessible links. As in the case of thepreferred embodiment, communication links 28′, 32 and 715 may be anycombination of publically accessible or secure dedicated links.

The difference between merchant store 12 (FIG. 3) and online merchant12′ is that merchant store 12 is a conventional “brick and mortar” storewhere consumers can physically select and purchase merchandise, whereasonline merchant 12′ is a WEB site operated by a merchant that allowsonline consumers to examine and purchase merchandise over a computernetwork. Online merchant computer 734 is preferably operated by retailestablishments (Macy's, K-mart, Border's etc.) Its main role is tocollect merchandise orders from online consumer terminals 710, andarrange for delivery of the merchandise once it receives authorizationfrom a payment processing system 16.

FIG. 8 is a diagrammatic representation of an online merchant computer734 in accordance with the present invention. As shown in FIG. 8, onlinemerchant computer 734 is comprised of a main memory 800, a displaydevice 810, input device 820, a mass storage device 840, a CPU 830 and anetwork interface card or modem 850. As further shown in FIG. 8, themass storage device 840 contains the merchant's product database 845.Product database 845 is comprised of information on various merchantproducts available online. Once a user accesses a merchant's home page,he/she will be able to access all of the merchant's product pages thatare associated with the home page. Individual pages may be sent in theform of Hyper-Text Markup Language (HTML) pages across communicationlink 715 to a WEB browser 960 operating on a requesting online consumercomputer 710.

As shown in FIG. 9, the online consumer computer 710 preferably includesa main memory 900, a display device 910, input device 920 such as akeyboard and a pointing device (e.g., mouse, track ball, pen, slidepointer or similar device), a mass storage device 940, a transceiver970, a printer 990, and a CPU 930 for performing various functionsrelated to retrieving and viewing WEB pages stored on the Internet.These components communicate through a system bus 980 or similararchitecture. Additionally, the customer computer 710 is preferablyconnected to a network interface card or modem 950 for communicationwith the transaction processing system 26. The mass storage device 940of the customer computer 710 maintains an Internet browser 960 fordirecting the CPU.

The second preferred embodiment processes transactions very similarly tothe first embodiment. That is, an online consumer located at an onlineconsumer computer 710 selects merchandise, identifies it to the onlinemerchant computer 734 and inputs his or her customer/transmitter IDnumber using a customer transceiver 50 into transceiver 970. Theinformation is transmitted from transceiver 970 via system bus 980 toCPU 930 where it is then transmitted to the online merchant computer734. Upon receiving the data, the online merchant computer 734 createsan authorization request comprised of the customer ID, a merchant ID andtransaction data, and then transmits the data to transaction processingsystem 26. Transaction processing system 26 then transmits the data tothe appropriate payment processing system 16. As in the case of thepreferred embodiment, payment processing system 16 authorizes thetransaction and then transmits an authorization back to the onlinemerchant computer 734 and online consumer computer 710 via thetransaction processing system 26. Once the online merchant computer 734receives the authorization, merchants online sales associate preparesthe merchandise identified by the customer, and then ships it to theaddress indicated in the customer information database 100 or any otherlocation specified by the customer. The transaction processing system 26is capable of managing customer loyalty and consumer trend analysis inthe same manner as the first embodiment. In fact, since the transactionprocessing system 26 is capable of interacting with both in-store andon-line systems, it provides participating merchants the ability tocomprehensively monitor customer loyalty and consumer purchasing trendsfor online consumers and in-store consumers using a single system.

A third embodiment of the present invention is directed to a method andapparatus for processing retail non-cash transactions at a kiosk orother similar self-service station. A terminal located at the kiosk issimilar to online consumer computer 710 except that a product databasesimilar to that found in online merchant computer 734 is stored in themass storage device. In operation, the customer in merchant store 12approaches a kiosk in the store, indicates a food, merchandise orservice selection, and provides a customer/transmitter ID using inputdevice 920, customer transceiver 50 or a combination of the two. Indoing so, the customer has placed an order for the desired article offood, merchandise or service and simultaneously initiated paymentprocessing. Once the transaction is authorized, a receipt is printed onprinter 990 and the purchase is delivered to the customer, either at thekiosk or at another predetermined location. This embodiment provides acombination self-service, automatic payment processing system, withorder preparation being the only delay.

In yet another embodiment, a customer may place an order by telephoneprior to arriving at merchant store 12, by interfacing with an automatedsystem using DTMF tones through the telephone. That is, when anautomated operator at merchant store 12 answers the telephone call, thecustomer is prompted to enter the customer/transmitter ID number andhis/her purchasing preference via the DTMF buttons. Upon arrival, thecustomer's food, merchandise or service is ready at a drive-throughwindow or inside a special line within merchant store 12. Payment has,at this time, already been processed. The customer uses customertransceiver 50 to identify themselves prior to a sales associateproviding the merchandise to the customer. In this example, customertransceiver 50 is simply used to identify that the customer receivingthe food, merchandise or services is the customer who corresponds to thecustomer/transmitter ID previously communicated to the merchant throughthe DTMF system. Different transactions may be conducted and differentinformation may be exchanged between the merchant and customer toconfirm the customer's identification without departing from the scopeof this invention. For example, a customer may conduct a transactionover the telephone using a payment method not recognized by thetransaction processing system 26, and then take delivery of themerchandise/services after confirming his/her identification usingcustomer transceiver 50 and paying for the items. Customer transceiver50 may also be used to confirm an individual's identification even inthe absence of an underlying transaction. For example, a transceiver 48may be located adjacent to an airplane loading gate or other restrictedaccess point. A customer seeking to gain access to the restricted areasimply provides his identification by interfacing customer transceiver50 with merchant transceiver 48. This action initiates the securityprocess which may also require an additional form of identification(e.g., picture ID, boarding pass, etch) to complete. Once the process iscompleted, the customer is permitted to cross the boundary. Anotherembodiment of customer transceiver 50 includes a customer transceiverthat identifies a class of persons (e.g., handicapped) such that when aperson interfaces with the transaction processing system 26, anattendant will be alerted as to any special customer needs. Yet anotherembodiment includes a customer transceiver 50 that identifies anindividual to a service provider, permitting the service provider tothen access information about the customer for the purpose of providingpersonal services to the customer. A further embodiment includes acustomer transceiver 50 that transmits automatic teller machine (ATM)card information to an ATM. Once the ATM receives the information, thecustomer is prompted to input his/her PIN and transaction information,allowing the process to continue as usual.

Various active and customer transceivers (48 and 50, respectively) maybe implemented in the course of practicing this invention. For example,the TIRIS system commercially available from Texas InstrumentsCorporation is representative of the technology. Further details ofdigital signature transponder (DST) and TIRUS technology are containedin U.S. Pat. No. 5,541,604 assigned to Texas Instruments Deutsche LineGmBh, the disclosure of which is hereby expressly incorporated byreference. A simplified diagram of a preferred embodiment of customertransceiver 50 is shown in FIG. 10. As shown, customer transceiver 50 iscomprised of a keyboard 1110, CPU 1120, memory 1130, receiver 1140,transmitter 1150 and security pad 1160. As further shown in FIG. 10,keyboard 1110 is comprised of a plurality of buttons 1110 a-1110 l,labeled 0-9, “*” and “#”. Each button may correspond to its labelednumber/character, or to a selectable user option. For example, button1110 a may correspond to the number “1” such that when a user pressesit, the number “1” is communicated to CPU 1120. Button 1110 a mayalternatively correspond to a user-specified item (e.g., primary creditcard, a secondary credit card, or a debit/bank account). In a preferredembodiment, customer transceiver 50 has no independent battery or otherpower source, such that operational energy is received from transceiver(48 or 970), indicated generally in FIGS. 4 and 11, respectively.Customer transceiver 50 stores identification information such as acustomer ID, or customer/transmitter ID in programmable, read-onlymemory (PROM) device 1130 for subsequent, repeated transmission to atransceiver (48 or 970). Memory device 1130 could optionally be anerasable PROM (EPROM) or random access memory (RAM) device, therebyallowing ease in modifying the contents of the memory device. Aspreviously stated, one important characteristic of the preferredembodiment of customer transceiver 50 and merchant transceiver 48 isthat operational energy for customer transceiver 50 is transmitted fromthe transceiver (48 or 970). When customer transceiver 50 is broughtwithin close proximity to transceiver (48 or 970), a signal of a desiredfrequency passes through receiver 1140, causing it to generate a supplyvoltage for powering the other components of customer transceiver 50.The signal is received by CPU 1120 which then sends a signal to memorydevice 1130 and then to customer transceiver 1150 for transmission to anadjacent merchant transceiver 48.

FIG. 11 is a detailed flow diagram depicting the operation of customertransceiver 50. The process begins at step 1200 when the user bringscustomer transceiver 50 within close proximity to a transceiver (48 or970). In step 1205, an interrogation signal is transmitted from readerto customer transceiver 50. CPU 1120 processes the interrogation signalwith an algorithm which is fixedly programmed into memory 1130 (step1210). If the signal is valid, processing flows to step 1215, otherwiseprocessing terminates. In step 1215, the CPU waits for user input viakeyboard 1110. If the CPU does not receive input, processing flows tostep 1245, otherwise processing flows to step 1220, where the CPUdetermines whether the first character entered is a “#”, correspondingto button 1110 l. If the first character is a “#”, the CPU transmits apurchasing preference associated with the entered number (step 1240). Aspreviously stated, customer database 100 is capable of storing aplurality of customer purchasing preferences, corresponding to specificitems offered by merchant. Pressing “#” prior to pressing a numbered keyspecifies which order item the customer is interested in selecting. Forexample, “#1” corresponds to the first purchasing preference, pressing“#2” corresponds to the second, and so on. Processing then flows to step1245. If the first character is not a “#”, the CPU determines whetherthe first character is a “*”, corresponding to button 1110 j (step1225). If the first character is a “*”, the CPU 1120 transmits a paymentchoice selection associated with the entered number (step 1235). Thecustomer must have a valid payment method associated with the enterednumber, and it must be accepted by the merchant. Otherwise, the processwill terminate without authorizing the transaction. After the customerinformation has been entered, processing flows to step 1245 where theCPU 1120 next transmits the stored customer/transmitter ID. If the firstcharacter is not a “*”, processing flows to step 1230 where the CPU 1120simply transmits the entered numbers as a customer ID number. That is,the user may actually override the pre-programmed customer ID number andmanually input a customer ID number. Processing then flows to step 1250where the user is prompted to enter a PIN after which processingterminates. When the user manually enters a customer ID number, thesystem may also require additional authorizing information like a photoID and/or a signature, to further ensure that customer transceiver 50 isnot used in a fraudulent manner. While this specification describesoperation of customer transceiver 50 as including the capability tospecify a merchandise/service selection an alternate method of payment,a customer number or a PIN, it is obvious that any data or combinationof data may be transmitted by customer transceiver 50 without departingfrom the spirit and scope of this disclosure.

As shown in FIG. 10, customer transceiver 50 may optionally include asecurity pad 1160 comprising a fingerprint reader or other biometricrecording device. In operation, when customer transceiver 50 is issuedto the customer and prior to its first use, the customer inputs abiometric (fingerprint, palm print, pore print, retinal configuration,etc.) into security pad 1160. For the purposes of this discussion, it isassumed that the biometric is a fingerprint. The first time thatcustomer transceiver 50 is used, the customer fingerprint is read andstored in memory 1130 of customer transceiver 50. When customertransceiver 50 is used for subsequent transactions, it will onlyactivate if the same finger is placed upon security pad 1160, creating amatch with fingerprint information stored at the first use of customertransceiver 50. Of course, any finger may be used at initial usage,however, the same finger must then consistently be used on allsubsequent transactions. As an alternative, a predetermined number ofseparate fingerprints may be stored in customer transceiver 50,permitting its use by friends or family members. Initial fingerprintswill be read, for example, by depressing one of four predeterminedbuttons prior to first use of customer transceiver 50. A series offingerprints is then placed upon the security pad 1160 for storagewithin memory 1130 of customer transceiver 50. Customer transceiver 50would then permit subsequent purchases to be made when a fingerprint onpad 82 matches any of the fingerprints prestored within customertransceiver 50. Fingerprint reading, storing, and matching technology iscurrently available from the plurality of sources including, forexample, Indicator Technology Corporation, Biometric IdentificationInc., and AuthenTec. Even though this specification describes the use ofa fingerprint reader, other biometric identification options such aspalm prints, pore prints, retinal configurations, etc. may, of course,also be implemented using customer transceiver 50. It should beunderstood that while this specification describes a security padassociated with customer transceiver 50, the security pad may actuallybe included in a computer display touch screen.

Another embodiment of customer transceiver 50 includes a customertransceiver with read/write capability. That is, when customertransceiver 50 is used to authorize a transaction, information is passedinto memory 1130 from the merchant transceiver 48. For example, apredetermined quantity of money may be stored in memory 1130 such thatwhenever a transaction is carried out, the amount of the transaction isdeducted from the total stored in memory 1130. When the total isexhausted, customer transceiver 50 will not activate until an amount isrestored to memory 1130. Customer transceiver 50 may also track thecustomer's participation in loyalty programs by updating memory 1130with purchase data whenever a transaction is authorized. Customertransceiver 50 may additionally support remote reprogramming of memory1130. In other words, a customer wishing to change thecustomer/transmitter ID associated with customer transceiver 50 may doso by interfacing customer transceiver 50 with merchant transceiver 48and then modifying the customer/transmitter ID by entering a specialcode sequence using keyboard 1110, for example. It is envisioned thatwhenever an customer/transmitter ID is updated by a customer,transaction processing system 26 will disable the subject customertransceiver, pending confirmation of the change. Customer transceiver 50may alternatively accept customer/transmitter ID updates fromtransaction processing system 26 via merchant transceiver 48 withoutuser input.

Although the described embodiments employ a customer transceiver carriedas a separate item by the customer, customer transceiver 50 may beintegrated into another device. For example, customer transceiver 50 maybe embedded in a cellular phone, pager, remote control, car lock device,personal digital assistant, watch, or other miniature electronic device.

While the preferred embodiment of customer transceiver 50 envisions adevice that receives operational energy from a merchant transceiver 48prior to transmitting an RF signal, it is understood that any devicecapable of transmitting a signal across a wireless medium (e.g.,cellular, microwave, etc.) may be utilized without departing from thescope of this disclosure.

FIG. 12 shows a detailed diagram of merchant transceiver 48 aspreviously discussed with reference to FIGS. 4 and 10. As shown in FIG.12, merchant transceiver 48 is comprised of a CPU 1300, memory 1305,keyboard 1310, printer 1320, communication interface 1330, display 1340,transmitter 1350, and receiver 1360. Keyboard 1310, as further shown inFIG. 14, is comprised of a plurality of buttons 1310 a-1310 l, labeled0-9, “*”, and “#”. Keyboard 1310 may be utilized for receiving manuallyentered data (e.g., PIN) and transmitting the data to communicationinterface 1330. In operation, transmitter 1350 transmits aninterrogation signal stored in memory 1305 to customer transceiver 50,causing the customer transceiver to generate a sufficient supply voltagefor powering the customer transceiver. Receiver 1360 receives a signalfrom customer transceiver 50 and then transmits the signal tocommunication interface 1330 for subsequent transmission to anassociated POS device 34, online customer computer 710, kiosk, etc.Communication interface 1330 may comprise a wireless or wirelineinterface, permitting merchant transceiver 48 to communicate withexternal devices from widely separated locations for the purpose oftransmitting information received from a customer transceiver 50 viareceiver 1360. Communication interface 1330 further permits merchanttransceiver 48 to interface over the Public Switched Telephone Network(PSTN) via an RS232 connection to an internal modem (not shown).Customer transceiver 50 consequently may be capable of interfacing witha central location (over CATV coaxial cable) such that a person wishingto watch a pay-per-view™ movie can communicate with the pay per viewsystem and purchase the movie directly through the television. Printer1320 may be used to print a receipt for a customer upon completion of atransaction, and display 1340 may be used to communicate information toa customer (e.g., when to input his/her PIN.)

An alternate embodiment merchant transceiver includes a merchanttransceiver built into or attachable to a portable device (e.g., PalmPilot™, hand-held computer, etc.) that enables the capture andtransmission of a customer ID and other security information forauthenticating payment for goods and services via the Internet, orauthenticating and authorizing access to digital information (e.g.,movies, music, online books, research) and applications (e.g.,voice/mail, personal calendar, “sports entertainment package,” golfhandicapping program). A further embodiment includes a portable merchanttransceiver that allows a vendor (pizza delivery person) to authorizetransactions from any location. The merchant transceiver includes a CPU1300 with sufficient memory 1305 to capture and locally process atransaction. The merchant transceiver may or may not have wirelessconnectivity to the transaction processing system 26. Yet a furtherembodiment includes a merchant transceiver associated with a vendingmachine (snacks, cigarettes, stamps, etc.), pay phone, etc. forauthorizing consumer transactions.

As discussed above, the preferred embodiment of the merchant transceiver48 transmits power to, and receives an RF signal from a co-locatedcustomer transceiver. However, any device capable of receiving awireless signal (cellular, microwave, etc.) is capable of functioning inthe place of the merchant transceiver without departing from the scopeof this invention.

In a preferred embodiment, transaction processing system 26 is owned andoperated by a company separate from the entities that own merchant store12 and payment processing system 16. In exchange for the serviceprovided by transaction processing system 26, merchants are charged feesto process transceiver-based transactions. First, a transaction fee ischarged for each transaction processed through transaction processingsystem 26. In addition, an advertising fee may be charged to cover brandcommunication. That is, customer transceiver 50 is supplied under abrand name owned by the owner of transaction processing system 26. Thisbrand name is widely advertised to entice customers to patronizemerchant stores 12 having the ability to conduct transactions usingcustomer transceiver 50. Thus, the owner of transaction processingsystem 26 charges an advertising fee to participating merchant stores12.

Alternatively, the transaction processing system 26 may permit largecorporations owning multiple retail outlets to market customertransceiver 50 using their brand name. Thus, such merchant companieswill “issue” customer transceivers 50 and pay a fee to the transactionprocessing system. The transaction processing system then offsets thesecosts to merchant stores 12 by providing monthly rebates based on thedollar volume of transceiver-based transactions conducted through itsoutlets.

The Preferred Method for Processing a Financial Transaction

The preferred method for processing a financial transaction will now bedescribed in conjunction with FIGS. 13-17. As described above, thesystem 10 is operative for capturing a customer's transmitter ID at aPOS device 34, combining the captured data with the merchant ID and thecustomer's selected purchase items into an authorization request,encrypting at least a portion of the request (if desired), andtransmitting it to transaction processing system 26. Once it receivesthe authorization request, the transaction processing system 26identifies the appropriate payment processing system 16 and thentransmits the customer's payment data and the transaction data to thepayment processing system 16 for authorization. After the paymentprocessing system 16 authorizes the transaction, it transmits anauthorization code back to the merchant via the transaction processingsystem 26. The transaction processing system 26 may also transmitcustomer identification and purchase data upon request by aparticipating merchant. In addition to its function of authorizingretail transactions, transaction processing system 26 also collects thetransaction data for later use in compiling consumer purchasing trenddata and tracking a consumer's progress in a merchant's loyalty program.

FIG. 13 is a flow diagram illustrating the preferred method 200 forprocessing financial transactions. The steps that comprise the methoddescribed in 200 are carried out by the various equipment that form apart of system 10 for processing financial transactions. The methodbegins at step 300 with the customer accessing the enrollment subsystemof the transaction processing system 26. This step includes all theactivities that must take place before an individual can consummateretail transactions with customer transceiver 50 using transactionprocessing system 26. After the customer is enrolled, processing flowsto step 400 and the system then is capable of processing a customertransaction. At a predetermined time interval, preferably every 24hours, processing then flows to step 500 where system 10 updatescustomer preferences and profiles and settles charges for the timeperiod. Next processing flows to step 600 at which time system 10performs the processing necessary to archive captured data and updateloyalty program data.

FIG. 14 is a detailed flow diagram depicting the steps performed bysystem 10 in step 300 of FIG. 13. As shown in FIG. 14, the processbegins in step 310 when a customer accesses the enrollment subsystem ofthe transaction processing system 26 for the purpose of opening anaccount. The act of accessing the enrollment subsystem of transactionprocessing system 26 can be performed any number of ways from simplytelephoning a human customer assistance representative and verballycommunicating the information over the telephone, to dialing a telephonenumber and interfacing with a computer using dial tone multi frequency(DTMF) tones, to logging onto the Internet and accessing a predetermineduniform resource locator (URL). Once the customer is logged onto thesystem, processing flows to step 320 and the enrollment subsystem oftransaction processing system 26 prompts the user to enter customerinformation. During this process, the customer provides customer profileinformation 102, customer payment method information 112, and customerpersonal information 114. These data are used for communicating with thecustomer and may be combined with other data (e.g., transactioninformation 110, customer personal information 114, etc.) to providespecial promotions of particular interest to the customer. Duringenrollment, the customer also provides the payment methods to be invokedby the transaction processing system 26, whenever he/she initiates atransaction. For example, a customer will provide credit, debit, andother payment-related data so that the customer may be properly chargedfor purchases. When the customer enters data in the customer transactiondatabase 100, he/she may select any one of the merchant's acceptedpayment methods in which he/she also has accounts. That is, the customermay choose to have all of his transactions conducted in merchant #1'sretail establishments allocated to his VISA™ card even though he hasseveral other cards that are also accepted by merchant #1.Alternatively, the customer may specify that his transceiver-basedtransactions will be processed and paid through his bank credit or debitcard. Furthermore, the customer may specify that all transactions atmerchant #1 will be cash transactions, despite the fact that thecustomer also has credit accounts accepted by merchant #1. The number ofmerchants associated with each customer record in customer transactiondatabase 100 depends on the number of merchants entered into the systemby a particular customer. In other words, customer #1 may have twomerchant entries, corresponding to the number of merchants that thecustomer frequents, whereas customer #2, who is less debt averse mayhave 20 merchant entries. It is important to realize that certaininformation must be entered in order for the system to operate properly(e.g., name, address, PIN#, etc.), and other information can be enteredat the discretion of the customer (e.g., marital status, birth date,etc.) When enrolling, the customer is informed that not only is theinput of certain information discretionary, but that they can restrictthe publication and use of the information by the transaction processingsystem 26.

Customers may also identify a default payment method to be applied to aparticipating merchant for which no other payment method has beenidentified. This default payment method would also be applied to newmerchants that join the transaction processing system 26 after thecustomer enrolled. Part of the enrollment process includes the customerproviding customer personal information such as preferred product brandsat different merchants, anniversary and other important dates, clothingsizes, etc. As explained below, all of the data provided by the customerduring the enrollment process can be later changed at the customersdiscretion. A customer can request more than one customer transceiver 50to be associated with each account as well as identify other authorizedusers for each customer transceiver. The rules for use of multiplecustomer transceivers 50 by multiple individuals are controlled based onthe rules of the payment processor 16.

Once the customer has entered the requested information, system 26validates the payment methods selected by the customer for legitimacyand acceptance. This process is carried out by comparing user-inputtedinformation with data stored in payment processing terminal 52. Once thedata is determined to be valid, processing flows to step 345 and thedata is stored in customer information database 100. A customertransceiver 50 is programmed with the customer's ID number in step 370,the customer transceiver 50 is mailed to the customer in step 380.Before the customer can use customer transceiver 50 to authorize atransaction, customer transceiver 50 must be activated by the customer.This security process helps ensure legitimate use of the customertransceiver 50 by authorized personnel. In a preferred embodiment,customers activate customer transceiver 50 using identificationinformation provided by them during enrollment and information providedto them in the device package. Once customer transceiver 50 isactivated, it can be used by a customer to activate a transaction. Ifthe data is invalid, the system prompts the user to correct the invalidinformation and processing is routed back to step 320 where the customeris prompted to re-input the invalid information.

FIG. 15 is a detailed flow diagram depicting the steps performed in step400 of FIG. 13. As shown in step 410, the first step occurs when acustomer shopping in merchant store 12 identifies merchandise forpurchase to a sales associate. Next in step 415, the sales associateutilizes input device 40 of POS device 34 to enter the merchandise intoCPU 36 which then computes a transaction amount. After reviewing thetransaction record, the customer in step 420 identifies him/herself tosystem 26 by interfacing customer transceiver 50 with merchanttransceiver 48. Customer transceiver 50 consists of an electronictransmitter/receiver combination including a unique customer/transmitterID number programmed therein. When customer transceiver 50 interfaceswith merchant transceiver 48, a customer identification signal includingthe unique customer/transmitter ID number is transmitted to merchanttransceiver 48. To provide security, merchant transceiver 48 andcustomer transceiver 50 employ technology in which an interrogationsignal is transmitted from merchant transceiver 48 to customertransceiver 50. Customer transceiver 50 processes the interrogationsignal with an algorithm which is fixedly programmed into customertransceiver 50 and then transmits a response back to merchanttransceiver 48, consisting of a customer/transmitter ID number. Theinterrogation signal and the response signal are highly encrypted suchthat intense processing power over a long period of time will benecessary to fraudulently extract the unique customer/transmitter IDnumber from the customer transceiver 50.

Once merchant transceiver 48 receives the customer/transmitter IDnumber, it transmits the data, together with the specifics of the retailtransaction (cost, identification of merchandise, etc.) overcommunications link 28 to transaction processing system 26 (step 425).An important feature of system 10 is that the customer's credit card isnever exchanged with a sales associate. Therefore, the possibility thatthe card will be fraudulently used by an unscrupulous sales associatedoes not arise.

An alternate embodiment of the present invention includes a system 26that instead of transmitting a customer's credit card number acrosscommunication links (FIGS. 3 and 9), only transmits acustomer/transmitter ID across communication links. In this embodiment,payment processor 16 maintains data that provides a correlation betweencustomer/transmitter ID numbers and payment methods. Also, merchantstore 12 creates a transaction record based using thecustomer/transmitter ID number instead of the credit/debit card number.In operation, when an authorization request is transmitted totransaction processing system 26 from a merchant store 12, transactionprocessing system 26 processes transactions by matching thecustomer/transmitter ID number with data stored in customer informationdatabase 100. After the system identifies the customer ID (step 435), itlinks it to the customer's name (step 445) and then to the transactioninformation (step 450). If the system does not find the customer ID instep 435, it transmits a message to the merchant informing it that thecustomer is attempting to utilize an invalid customer transceiver (step440). If the system finds the customer ID in step 435, it maysimultaneously authorize the retail transaction, pending finalauthorization by the payment processor 16. That is, at the same time asthe rest of the authentication process is occurring, the system mayauthorize the initiation of delivery of the desired goods services. Forexample, during an automobile refueling process, the system willactivate a fuel pump, minimizing the customers delay even though finalapproval has not yet been obtained. If in step 460, the system finds themerchant's name, it identifies the customer's payment method for thatparticular merchant (step 470) and determines the flow and destinationof the authorization data, based on the type of transaction (credit,debit, cash, etc.) Security information may also be utilized by thetransaction processing system 26 to reduce misuse of customertransceiver 50. Examples of controls include but are not limited tochecking the frequency of use of a particular customer transceiver 50within a certain period of time, frequency of use a customer transceiver50 within certain financial limits and frequency of use of customertransceiver 50 and financial limits within a specific geographic region.

In the event that the transaction requires authorization, such as in acredit card transaction, the merchant POS device 34 communicates withtransaction processing system 26 as described above to identify thecorrect payment processor 16 and transmit the transaction request tothat payment processor for disposition. If the transaction is authorizedin step 484, the system next in step 488 determines whether the customeris entitled to any frequent customer, or loyalty awards by comparing thecustomer's transaction activity stored in transaction information 110with the loyalty program information 108. The authorization and theaward data (if any) are transmitted to the merchant via the transactionprocessing system 26 (step 490) and in step 492, the customer is givenhis merchandise or services and notified of his/her award. In step 494the transaction processing system 26 archives the transaction data insecondary storage device 94 for later analysis. If for some reason thepayment processing system 16 is not able to process this particulartransaction due to, for example, communication's difficulties or atransaction amount causing the customer to exceed his credit limit, amessage is transmitted to the merchant via the transaction processingsystem 26 in step 486 that the transaction is not authorized and thein-progress delivery of merchandise (e.g., gasoline) is immediatelydiscontinued. The sales associate is then notified in a well-knownmanner to ask the customer for an alternative method of payment andprocessing terminates. While this specification provides that thetransaction terminates when the payment method cannot be authorized,there are several other alternatives that can be implemented withoutdeparting from the scope of the present invention. For example, if thepayment method does not work, it is possible that an alternate could berequested by the system and utilized.

If the transaction does not require authorization (i.e., cash or otherliquid asset is used), POS device 34 still communicates with transactionprocessing system 26 to provide transaction information 110 and loyaltyprogram information 108 to customer information database 100 and todetermine whether the customer is entitled to a loyalty award.

A customer may also utilize transaction processing system 26 to conductinquiries into the customer's progress toward fulfilling therequirements of a particular loyalty program. To initiate the request,the customer accesses the transaction processing system 26 as mentionedabove (i.e., by telephoning a human customer assistance representativeand verbally communicating the request over the telephone, or dialing atelephone number and interfacing with a computer using DTMF tones, orlogging onto the Internet and accessing a predetermined URL), and thencommunicating his/her request.

FIG. 16 is a detailed flow diagram depicting the steps performed in step500 of FIG. 13. In a preferred embodiment, customers can updateinformation contained in the customer information database 100 byfollowing the same process utilized when the information is firstcommunicated to the system. The reason for the update can range anywherefrom changed circumstances (customer address, status change, etc.) tochanging preferences with respect to specific merchants to adding newmerchants for a customer. Data security controls are utilized to ensurethat only legitimate customers can access and modify their profile data.To preclude customer updates from interfering with the operation of thesystem, it is envisioned that transaction processing system 26 willupdate customer information database 100 at predetermined times duringthe day, preferably during off-peak usage times. As shown in step 510,transaction processing system 26 periodically retrieves updated customerprofile data from an online memory location (RAM 88, or secondarystorage device 94). In step 520, the transaction processing system 26reconciles merchant accounts. That is, the system aggregates merchantsales, credits merchants and payment processors when appropriate andthen presents invoices to each merchant and payment processor, based onsales activities. Customer profile information 102, merchant information104, transaction information 110, and customer payment methodinformation 112 are used to determine the fees to be paid to each entity(merchant store 12 and payment processor 16, and transaction processingsystem 26, as appropriate.) Once the information is aggregated, thetransaction processing system 26 updates customer profile data (step530).

The process depicted in FIG. 16 does not include the process performedwhen a user seeks to have his/her transponder inactivated due to itbeing lost or stolen. In this case, the database will be immediatelyupdated in order to preclude fraudulent use of the transponder byunauthorized personnel.

FIG. 17 is a detailed flow diagram depicting the steps performed in step600 of FIG. 13. The transaction processing system 26, as shown in step610 periodically retrieves raw transaction data from secondary storagedevice 94. This retrieval can be performed at a predetermined time eachday, or it can be performed shortly after the transaction is completed.In any event, the raw transaction data consists of customer profileinformation 102, merchant information 104, loyalty program information108, transaction information 110, and customer personal information 114.This data is collected and analyzed for different purposes such asdetermining the effectiveness of the transaction processing system 26,refining and developing new, related products, and developing, trackingand analyzing loyalty programs and special promotions that are ofspecific interest to transaction processing system 26 customers andmerchants. In addition, the information may be sold to merchantcompanies 12 and payment processing systems 16 to provide personalizedservice to individual customers. It is expected that merchant companieswould pay for data from transaction processing system 26 based on volumeor a per project basis. In step 620, the transaction processing system26 updates loyalty data and in step 630, the updated information istransmitted to merchants who desire the additional data customertransaction data with demographic data that may be used to trackcustomer purchasing trends.

It will be apparent to those skilled in the art that variousmodifications and variations can be made in the disclosed process andproduct without departing from the scope or spirit of the invention.Other embodiments of the invention will be apparent to those skilled inthe art from consideration of the specification and practice of theinvention disclosed herein. It is intended that the specification andexamples be considered as exemplary only, with a true scope and spiritof the invention being indicated by the following claims.

1. A method for processing transactions comprising the steps of:transmitting a signal to one of a plurality of point-of-sale devices,said signal comprising customer identification data; transmitting anauthorization request from one of said plurality of point-of-saledevices to a transaction processing system, said authorization requestcomprising a merchant identifier, transaction data, and said customeridentification data; determining, from said customer identificationdata, a payment processor that corresponds to said merchant identifier;transmitting said authorization request to said payment processor; andtransmitting to one of said plurality of point-of-sale devices saidpayment processor's response to said authorization request.
 2. Themethod for processing transactions of claim 1, wherein said customeridentification data further comprises a personal identification numbermanually entered at said one of a plurality of point-of-sale devices bya customer.
 3. A method for processing transactions comprising the stepsof: receiving a signal at a point-of-sale device, said signal comprisingcustomer identification data; transmitting an authorization request fromsaid point-of-sale device to a transaction processing system, saidauthorization request comprising a merchant identifier, transactiondata, and said customer identification data; and receiving a response tosaid authorization request from said transaction processing system. 4.The method for processing transactions of claim 3, wherein said customeridentification data further comprises a personal identification numbermanually entered at said point-of-sale device by a customer.
 5. A methodfor collecting consumer purchasing trend information in a transactionsystem said method comprising the computer-implemented steps of:transmitting a signal to one of a plurality of point-of-sale devices,said signal comprising customer identification data; transmitting anauthorization request from one of said plurality of point-of-saledevices to said transaction processing system, said authorizationrequest comprising a merchant identifier, transaction data, and saidcustomer identification data; and updating a database with saidtransaction data and said customer identification data.
 6. The methodfor processing transactions of claim 5, wherein said customeridentification data further comprises a personal identification numbermanually entered at said one of a plurality of point-of-sale devices bya customer.
 7. The method of claim 5, wherein the step of transmittingan authorization request further includes the following steps of:determining, from said customer identification data, a payment processorthat corresponds to said merchant identifier; and transmitting saidauthorization request from said transaction processing system to saidpayment processor for authorization.
 8. The method of claim 7, whereinsaid step of updating a database further comprises the step of updatinga database with said transaction data and said customer identificationdata when said payment processor authorizes said transaction.
 9. Amethod of monitoring customer progress in a merchant award program,comprising the steps of: transmitting a signal to one of a plurality ofpoint-of-sale devices, said signal comprising customer identificationdata; transmitting an authorization request from one of said pluralityof point-of-sale devices to a transaction processing system, saidauthorization request comprising a merchant identifier, said transactiondata, and said customer identification data; and crediting a customeraccount in a database with loyalty points indicative of said transactiondata.
 10. The method for processing transactions of claim 9, whereinsaid customer identification data further comprises a personalidentification number manually entered at said one of a plurality ofpoint-of-sale devices by a customer.
 11. The method of claim 9, whereinthe step of transmitting an authorization request further includes thefollowing steps of: determining, from said customer identification data,a payment processor that corresponds to said merchant identifier; andtransmitting said authorization request from said transaction processingsystem to said payment processor for authorization.
 12. The method ofclaim 11, wherein said step of updating a database further comprises thestep of updating a database with said transaction data and said customeridentification data when said payment processor authorizes saidtransaction.
 13. A method for processing transactions comprising thesteps of: means for transmitting a signal to one of a plurality ofpoint-of-sale devices, said signal comprising customer identificationdata; means for transmitting an authorization request from one of saidplurality of point-of-sale devices to a transaction processing system,said authorization request comprising a merchant identifier, transactiondata, and said customer identification data; means for determining, fromsaid customer identification data, a payment processor that correspondsto said merchant identifier; means for transmitting said authorizationrequest to said payment processor; and means for transmitting to saidone of a plurality of point-of-sale devices a response from said paymentprocessor.
 14. A method of identifying a customer for the purpose ofdelivering personal services to the customer, comprising the steps of:transmitting a signal over a wireless transmission medium to a merchanttransceiver co-located with an attendant, said signal comprisingcustomer identification data; determining, from said customeridentification data, a personal service that corresponds to saidcustomer identification data; and providing said personal service tosaid customer by the attendant.
 15. The method for processingtransactions of claim 14, wherein said customer identification datafurther comprises a personal identification number manually entered atsaid point-of-sale device by a customer.
 16. A computer-readable mediumcontaining instructions for processing transactions comprising the stepsof: transmitting a signal to one of a plurality of point-of-saledevices, said signal comprising customer identification data;transmitting an authorization request from one of said plurality ofpoint-of-sale devices to a transaction processing system, saidauthorization request comprising a merchant identifier, transactiondata, and said customer identification data; determining, from saidcustomer identification data, a payment processor that corresponds tosaid merchant identifier; transmitting said authorization request tosaid payment processor; and transmitting to one of said plurality ofpoint-of-sale devices, said payment processor's response to saidauthorization request.
 17. The computer-readable medium of claim 16,wherein the step of transmitting a signal to one of a plurality ofpoint-of-sale devices, further comprises the step of capturing apersonal identification number entered by a customer.
 18. Acomputer-readable medium containing instructions for processingtransactions comprising the steps of: receiving a signal at apoint-of-sale device, said signal comprising customer identificationdata; transmitting an authorization request from said point-of-saledevice to a transaction processing system, said authorization requestcomprising a merchant identifier, transaction data, and said customeridentification data; and receiving a response from said paymentprocessor.
 19. The computer-readable medium of claim 18, wherein thestep of receiving a signal at a point-of-sale device further comprisesthe step of capturing a personal identification number entered by acustomer.
 20. A computer-readable medium containing instructions forcollecting consumer purchasing trend information in a transactionsystem, said method comprising the computer-implemented steps of:transmitting a signal to one of a plurality of point-of-sale devices,said signal comprising customer identification data; transmitting anauthorization request from one of said plurality of point-of-saledevices to said transaction processing system, said authorizationrequest comprising a merchant identifier, transaction data, and saidcustomer identification data; and updating a database with saidtransaction data and said customer identification data.
 21. Thecomputer-readable medium of claim 20, wherein the step of transmitting asignal to one of a plurality of point-of-sale devices, further comprisesthe step of capturing a personal identification number entered by acustomer.
 22. The computer-readable medium of claim 20, wherein the stepof transmitting an authorization request further includes the followingsteps of: determining, from said customer identification data, a paymentprocessor that corresponds to said merchant identifier; and transmittingsaid authorization request from said transaction processing system tosaid payment processor for authorization.
 23. The computer-readablemedium of claim 22, wherein said step of updating a database furthercomprises the step of updating a database with said transaction data andsaid customer identification data when said payment processor authorizessaid transaction.
 24. A computer-readable medium containing instructionsfor monitoring customer progress in a merchant award program, comprisingthe steps of: transmitting a signal to one of a plurality ofpoint-of-sale devices, said signal comprising customer identificationdata; transmitting an authorization request from one of said pluralityof point-of-sale devices to a transaction processing system, saidauthorization request comprising a merchant identifier, said transactiondata, and said customer identification data; and crediting a customeraccount in a database with loyalty points indicative of said transactiondata.
 25. The computer-readable medium of claim 24, wherein the step oftransmitting a signal to one of a plurality of point-of-sale devices,further comprises the step of capturing a personal identification numberentered by a customer.
 26. The computer-readable medium of claim 24,wherein the step of transmitting an authorization request furtherincludes the following steps of: determining, from said customeridentification data, a payment processor that corresponds to saidmerchant identifier; and transmitting said authorization request fromsaid transaction processing system to said payment processor forauthorization.
 27. The computer-readable medium of claim 26, whereinsaid step of updating a database further comprises the step of updatinga database with said transaction data and said customer identificationdata when said payment processor authorizes said transaction.
 28. Asystem for processing transactions, comprising: a customer transceiver;a merchant transceiver comprised of a transceiver antenna for providingoperating power to said customer transceiver and for exchanginginformation with said customer transceiver when said customertransceiver is placed in close proximity to said merchant transceiver; apoint-of-sale device processor, coupled to said merchant transceiver,for capturing transaction data, combining the transaction data with areceived customer/transmitter ID number and a merchant identifier toform an authorization request, and transmitting the authorizationrequest to a transaction processing system; and a transaction processingsystem comprising: a memory having program instructions; and a-processorconfigured to use said program instructions to: receive saidauthorization request; determine, from said customer identificationdata, a payment processor that corresponds to said merchant identifier;transmit said authorization request to said payment processor forauthorization; and transmit to one of said plurality of point-of-saledevices, said payment processor's response to said authorizationrequest.
 29. The system of claim 28, wherein said customer transceiveris further comprised of a memory operable to store information.
 30. Thesystem of claim 29, wherein said memory is operable to store atransmitter ID or a customer ID.
 31. The system of claim 29, whereinsaid customer transceiver is further comprised of a processor coupled tosaid memory, said processor is adapted to read data from, and write datato said memory.
 32. The system of claim 31, wherein said customertransceiver is further comprised of a security pad operable to capturebiometric data and to convert said data into an electronicrepresentation of said data.
 33. The system of claim 32, wherein saidbiometric data is a fingerprint.
 34. The system of claim 32, whereinsaid biometric data is a palm print.
 35. The system of claim 32, whereinsaid processor is adapted to: compare an electronic representation ofbiometric data with a digital image stored in said memory; and transmitsaid transmitter ID or said customer ID when said captured biometricdata is identical to said digital image stored in said memory.
 36. Thesystem of claim 31, wherein said processor is adapted to: compare atransaction amount with a dollar amount stored in said memory; andinhibit transmission of said transmitter ID and said customer ID whensaid transaction amount is greater than said dollar amount.
 37. Thesystem of claim 31, wherein said processor is adapted to subtract atransaction amount from a dollar amount stored in said memory when saidtransaction is authorized.
 38. The system of claim 29, wherein saidcustomer transceiver is further comprised of: a processor coupled to thememory; and a keyboard coupled to the processor; wherein said processoris operable to transmit information stored in said memory, or manuallyentered via said keyboard.
 39. The system of claim 28 wherein saidcustomer transceiver is embedded inside an article of clothing.
 40. Thesystem of claim 28 wherein said customer transceiver is embedded insidean item of jewelry.
 41. The system of claim 28 wherein said customertransceiver is embedded inside an electronic device.
 42. The system ofclaim 28 wherein said merchant transceiver is further comprised of: aprocessor coupled to the transceiver; and a keyboard coupled to theprocessor; wherein said processor is operable to receive informationmanually entered into said keyboard or received via said transceiver.43. The system of claim 42, wherein said merchant transceiver is furthercomprised of a display device for displaying information to a user. 44.The system of claim 42, wherein said merchant transceiver is furthercomprised of a printer for printing a receipt.
 45. The system of claim42, wherein said merchant transceiver is further comprised of a memoryoperable to store information relating to a transaction.
 46. The systemof claim 42, wherein said merchant transceiver is further comprised of acommunication interface for communicating with external computingdevices.
 47. The system of claim 46, wherein said communicationinterface provides wireless connectivity to a point-of-sale device. 48.The system of claim 46, wherein said communication interface providesconnectivity to a CATV network.
 49. The system of claim 46, wherein saidcommunication interface provides connectivity to the public switchedtelephone network (PSTN).
 50. The system of claim 46, wherein saidcommunication interface provides connectivity to a self-service vendingmachine or pay telephone.